gmo: monsanto's worst stock result, health warnings

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http://www.nytimes.com/2010/10/05/business/05monsanto.html?_r=2&partner=rss&emc=rss

After Growth, Fortunes Turn for Monsanto

ANDREW POLLACK
October 4, 2010

As recently as late December, Monsanto was named “company of the year” by Forbes magazine. Last week, the company earned a different accolade from Jim Cramer, the television stock market commentator. “This may be the worst stock of 2010,” he proclaimed.

Monsanto, the giant of agricultural biotechnology, has been buffeted by setbacks this year that have prompted analysts to question whether its winning streak of creating ever more expensive genetically engineered crops is coming to an end.

The company’s stock, which rose steadily over several years to peak at around $140 a share in mid-2008, closed Monday at $47.77, having fallen about 42 percent since the beginning of the year. Its earnings for the fiscal year that ended in August, which will be announced Wednesday, are expected to be well below projections made at the beginning of the year, and the company has abandoned its profit goal for 2012 as well.

The latest blow came last week, when early returns from this year’s harvest showed that Monsanto’s newest product, SmartStax corn, which contains eight inserted genes, was providing yields no higher than the company’s less expensive corn, which contains only three foreign genes. Monsanto has already been forced to sharply cut prices on SmartStax and on its newest soybean seeds, called Roundup Ready 2 Yield, as sales fell below projections.

But there is more. Sales of Monsanto’s Roundup, the widely used herbicide, has collapsed this year under an onslaught of low-priced generics made in China. Weeds are growing resistant to Roundup, dimming the future of the entire Roundup Ready crop franchise. And the Justice Department is investigating Monsanto for possible antitrust violations.

Until now, Monsanto’s main challenge has come from opponents of genetically modified crops, who have slowed their adoption in Europe and some other regions. Now, however, the skeptics also include farmers and investors who were once in Monsanto’s camp.

“My personal view is that they overplayed their hand,” William R. Young, managing director of ChemSpeak, a consultant to investors in the chemical industry, said of Monsanto. “They are going to have to demonstrate to the farmer the advantage of their products.” Brett D. Begemann, Monsanto’s executive vice president for seeds and traits, said the setbacks were not reflective of systemic management problems and that the company was moving to deal with them. “Farmers clearly gave us some feedback that we have made adjustments from,” he said in an interview Monday.

Mr. Begemann said that Monsanto used to introduce new seeds at a price that gave farmers two-thirds and Monsanto one-third of the extra profits that would come from higher yields or lower pest-control costs. But with SmartStax corn and Roundup Ready 2 soybeans, the company’s pricing aimed for a 50-50 split.

That backfired as American farmers grew only six million acres of Roundup Ready 2 soybeans this year, below the company’s goal of eight million to 10 million acres, and only three million acres of SmartStax corn, below the goal of four million.

So now Monsanto is moving back to the older arrangement. SmartStax seed for planting next year will be priced about $8 an acre more than other seeds, down from about a $24 premium for this year’s seeds, Mr. Begemann said. The company will also offer credits for free seed to farmers who planted SmartStax this year and were disappointed.

Monsanto has also moved to offer farmers more varieties with fewer inserted genes. Some farmers have said they often have to buy traits they do not need — such as protection from the corn rootworm in regions where that pest is not a problem — to get the best varieties. This issue has surfaced in the antitrust investigation.

Monsanto’s arch rival, DuPont’s Pioneer Hi-Bred, has also capitalized on the lack of options under a campaign called “right product, right acre.” “If they don’t have a need for rootworm then we won’t have that trait in that product,” Paul E. Schickler, the president of Pioneer, said in an interview.

After years of rapidly losing market share in corn seeds to Monsanto, Pioneer says it has gained back four percentage points in the last two years, to 34 percent. Monsanto puts its market share at 36 percent in 2009 and says it has remained flat this year. In soybeans, Pioneer puts its share at 31 percent, up seven percentage points over the last two years; Monsanto puts its share at 28 percent last year and said it had dropped some this year.

Monsanto had a similar problem with lower-than-expected yields on Roundup Ready 2 soybeans last year, when the crop was first planted commercially, forcing it to slash its premium. But this year, the yield appears to be meeting expectations, said OTR Global, a research firm that surveys farmers and seed dealers. That could bode well for SmartStax next year.

One reason is that the Roundup Ready 2 gene is now offered in more varieties, making it better suited to more growing conditions. The yield of a crop is mainly determined by the seed’s intrinsic properties, not the inserted genes. An insect protection gene will not make a poor variety a high yielder any more than spiffy shoes will turn a slow runner into Usain Bolt. In the first year of a new product, few varieties contain the new gene.

Still, Monsanto is bound at some point to face diminishing returns from its strategy of putting more and more insect-resistant and herbicide-resistant genes into the same crop, at ever increasing prices. Growth might have to eventually come from new traits, such as a drought-tolerant corn the company hopes to introduce in 2012.

“Technologically, they are still the market leader,” said Laurence Alexander, an analyst at Jefferies & Company. “The main issue going forward is do they get paid for the technology they deliver. The jury is still out on that one. It’s going to take a year or two of data to reassure people.”

A version of this article appeared in print on October 5, 2010, on page B1 of the New York edition.


http://www.voltairenet.org/article166785.html

GMO Crop Catastrophe in USA a lesson for EU

by F. William Engdahl
22 August 2010

As the European Union moves closer to approving the cultivation of GMOs despite stiff widespread opposition, it ought to be paying urgent attention to the agricultural arms race unfolding in the United States. The gospel of high-tech genetically modified (GM) crops is no longer sounding quite so sweet. Roundup-resistant “superweeds” are plaguing Monsanto crops across southern US states, driving farmers to use more herbicides, abandon their farms or return to conventional crops, while an increasing number are switching to organic production.

Recently the unelected potentates of the EU Commission in Brussels have sought to override what has repeatedly been shown to be the overwhelming opposition of the European Union population to the spread of Genetically Modified Organisms (GMO) in EU agriculture. EU Commission President now has a Maltese accountant as health and environment Commissioner to rubber stamp the adoption of GMO. The former EU Environment Commissioner from Greece was a ferocious GMO opponent. As well, the Chinese government has indicated it may approve a variety of GMO rice. Before things get too far along, they would do well to take a closer look at the world GMO test lab, the USA. There GMO crops are anything but beneficial. Just the opposite.

What is carefully kept out of the Monsanto and other agribusiness propaganda in promoting genetically manipulated crops as an alternative to conventional is the fact that in the entire world until the present, all GMO crops have been manipulated and patented for only two things - to be resistant or "tolerant" to the patented highly toxic herbicide glyphosate chemicals that Monsanto and the others force farmers to buy as condition for buying their patented GMO seeds. The second trait is GMO seeds that have been engineered genetically to resist specific insects. Contrary to public relations myths promoted by the agribusiness giants in their own self-interest, there exists not one single GMO seed that provides a greater harvest yield than conventional, nor one that requires less toxic chemical herbicides. That is for the simple reason there is no profit to be made in such.

Giant Super-weeds Plague

As prominent GMO opponent and biologist, Dr Mae-Wan Ho of the Institute of Science in London has noted, companies such as Monsanto build into their seeds herbicide-tolerance (HT) due to glyphosate-insensitive form of the gene coding for the enzyme targeted by the herbicide. The enzyme is derived from soil bacterium Agrobacterium tumefaciens. Insect-resistance is due to one or more toxin genes derived from the soil bacterium Bt (Bacillus thuringiensis). The United States began large scale commercial planting of GMO plants, mainly soybeans and corn and cotton around 1997. By now, GM crops have taken over between 85 percent to 91 percent of the areas planted with the three major crops, soybean, corn and cotton in the US, on nearly 171 million acres.

The ecological time-bomb that came with the GMO according to Ho, is about to explode. Over several years of constant application of patented glyphosate herbicides such as Monsanto’s famous and highly Roundup, new herbicide-resistant "super-weeds" have evolved, nature’s response to man-made attempts to violate it. The super-weeds require significantly more not less herbicide to control.

ABC Television, a major US national network, made a recent documentary about the super-weeds under the rubric, "super weeds that can’t be killed. [1]

They interviewed farmers and scientists across Arkansas who described fields overrun with giant pigweed plants that can withstand as much glyphosate as farmers are able to spray. They interviewed one farmer who spent almost €400 000 in only three months in a failed attempt to kill the new super-weeds.

The new super-weeds are so robust that harvester combines are unable to harvest the fields and hand tools break trying to cut them down. At least 400 000 hectares of soybean and cotton in Arkansas alone have become invested with this new mutant biological plague. Detailed data on other agricultural regions is not available but believed similar. The pro-GMO and pro-agribusiness US Department of Agriculture has been reported lying about the true state of US crop harvest partly to hide the grim reality and to prevent an explosive revolt against GMO in the world’s largest GMO market.

One variety of super-weed, palmer pigweed can grow up to 2.4 meters high, withstands severe heat and prolonged droughts, and produces thousands of seeds with a root system that drains nutrients away from crops. If left unchecked, it takes over an entire field in a year. Some farmers have been forced to abandon their land. To date palmer pigweed infestation in GMO crop regions has been identified in addition to Arkansas, also in Georgia, South Carolina, North Carolina, Tennessee, Kentucky, New Mexico, Mississippi and most recently, Alabama and Missouri.

Weed scientists at the University of Georgia estimate that just two palmer pigweed plants in every 6 meter length of cotton row can reduce yield by at least 23 percent. A single weed plant can produce 450 000 seeds. [2]

Roundup Toxic Danger Being Covered-up

Glyphosate is the most widely used herbicide in the US and the world at large. Patented and sold by Monsanto since the 1970s under the trade name Roundup, it is a mandatory component of buying GMO seeds from Monsanto. Just go to your local garden store and ask for it and read the label carefully.

As I detail in my book, Seeds of Destruction: The Hidden Agenda of Genetic Manipulation, GMO crops and patented seeds were developed in the 1970’s with significant financial support from the pro-eugenics Rockefeller Foundation, by what were essentially chemical companies - Monsanto Chemicals, DuPont and Dow Chemicals. All three were involved in the scandal of the highly toxic Agent Orange used in Vietnam, as well as Dioxin in the 1970’s, and lied to cover up the true damage to its own employees as well as to civilian and military populations exposed.

Their patented GMO seeds were seen as a clever way to force increased purchase of their agricultural chemicals such as Roundup. Farmers must sign a legal contract with Monsanto in which it stipulates that only Monsanto Roundup pesticide may be used. Farmers are thus trapped both in buying new seeds from Monsanto each harvest and buying the toxic glyphosate.

France’s University of Caen, in a team led by molecular biologist, Gilles-Eric Seralini, did a study that showed Roundup contained one specific inert ingredient, polyethoxylated tallowamine, or POEA. Seralini’s team demonstrated that POEA in Roundup was more deadly to human embryonic, placental and umbilical cord cells than even the glyphosate itself. Monsanto refuses to release details of the contents of its Roundup other than glyphosate, calling it "proprietary."

The Seralini study found that Roundup’s inert ingredients amplified the toxic effect on human cells - even at concentrations much more diluted than those used on farms and lawns! The French team studied multiple concentrations of Roundup, from the typical agricultural or lawn dose down to concentrations 100,000 times more dilute than the products sold on shelves. The researchers saw cell damage at all concentrations.

Glyphosate and Roundup are advertised as "less toxic to us than table salt" in a pamphlet from the Biotechnology Institute promoting GMO crops as ’Weed Warrior.’ Thirteen years of GMO crops in the USA has increased overall pesticide use by 318 million pounds, not decreased as promised by the Four Horsemen of the GMO Apocalypse. The extra disease burden on the nation from that alone is considerable.

Nonetheless after introduction of Monsanto GMO seeds commercially in the USA, use of glyphosate has risen more than 1500% between 1994 and 2005. In the USA some 100 million pounds of glyphosate are used on lawns and farms every year, and over the last 13 years, it has been applied to more than a billion acres. When questioned, Monsanto’s technical development manager, Rick Cole, reportedly said the problems were "manageable." He advised farmers to alternate crops and use different makes of herbicides produced by Monsanto. Monsanto is encouraging farmers to mix glyphosate with its older herbicides such as 2,4-D, banned in Sweden, Denmark and Norway for links to cancer and reproductive and neurological damage. 2,4-D is a component of Agent Orange, produced by Monsanto for use in Vietnam in the 1960s.

US Farmers Turn to Organics

Farmers across the United States are reported to be going back to conventional non-GMO crops instead. According to a new report from the US Department of Agriculture, retail sales of organic food went up to $21.1 billion in 2008 from $3.6 billion in 1997. [3] The market is so active that organic farms have struggled at times to produce sufficient supply to keep up with the rapid growth in consumer demand, leading to periodic shortages of organic products.

The new UK Conservative-Liberal coalition government is strongly backing lifting a de facto ban on GMO in that country. UK Chief Scientific Adviser, Prof. John Beddington, recently wrote an article in which he misleadingly claimed " The next decade will see the development of combinations of desirable traits and the introduction of new traits such as drought tolerance. By mid-century much more radical options involving highly polygenic traits may be feasible." He went on to promise "cloned animals with engineered innate immunity to diseases" and more. I think we can pass that one up, thank you.

A recent study by Iowa State University and the US Department of Agriculture assessing the performance of farms during the three-year transition it takes to switch from conventional to certified organic production showed notable advantages of organic farming over GMO or even conventional non-GMO crops. In an experiment lasting four years - three years transition and first year organic - the study showed that although yields dropped initially, they equalized in the third year, and by the fourth year, the organic yields were ahead of the conventional for both soybean and corn.

As well, the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) has recently been published, the result of three-year deliberation by 400 participating scientists and non-government representatives from 110 countries around the world. It came to the conclusion that small scale organic agriculture is the way ahead for coping with hunger, social inequities and environmental disasters. [4] As Dr Ho argues, a fundamental shift in farming practice is needed urgently, before the agricultural catastrophe spreads further across Germany and the EU to the rest of the world. [5]

F. William Engdahl

Author of Gods of Money: Wall Street and the Death of the American Century and Full Spectrum Dominance: Totalitarian Democracy in the New World Order. His other books include Seeds of Destruction: The Hidden Agenda of Genetic Manipulation. and A Century of War: Anglo-American Oil Politics and the New World Order.

[1] "Super weed can’t be killed", ABC News, 6 October 2009. See also, Jeff Hampton, N.C. farmers battle herbicide-resistant weeds, The Virginian-Pilot, 19 July 2009.

[2] Clea Caulcutt, ‘Superweed’ explosion threatens Monsanto heartlands, Clea Caulcutt, 19 April 2009.

[3] Carolyn Dimitri and Lydia Oberholtzer, Marketing U.S. organic foods: recent trends from farms to consumers, USDA Economic Research Service, September 2009.

[4] International Assessment of Agricultural Knowledge, Science and Technology for Development, IAASTD, 2008.

[5] Ho MW UK Food Standards Agency study proves organic food is better. Science in Society 44, 32-33, 2009.

http://www.globalresearch.ca/index.php?context=va&aid=21251

Study Shows Monsanto Roundup Herbicide Link to Birth Defects

F. William Engdahl

A major new scientific study has confirmed growing conviction that the world’s most widely used chemical herbicide, Monsanto Corporation’s Roundup is toxic and a danger to human as well as animal organisms. The latest scientific research carried out by a multinational scientific team headed by Professor Andrés Carrasco, head of the Laboratory of Molecular Embryology at the University of Buenos Aires Medical School and member of Argentina’s National Council of Scientific and Technical Research, presents alarming demonstration that Monsanto and the GMO agribusiness industry have systematically lied about the safety of their Roundup. Roundup in far lower concentrations than used in agriculture is linked to birth defects. The health implications are huge. All major GMO crops on the market today are genetically manipulated to “tolerate” the herbicide Roundup.

Glyphosate was patented by Monsanto in the 1970’s well before GMO was commercialized, as a so-called broad-spectrum weed killer. It is typically sprayed and absorbed through the leaves, or used as a forestry herbicide. It was initially patented and sold by Monsanto under the trade name Roundup, which also contains non-disclosed added chemicals the company refuses to divulge for “trade secret” reasons. As of 2005, 87% of all US soybean fields were planted with glyphosate-resistant varieties of GMO soybeans and sprayed with Roundup.

Because the seeds of Monsanto Roundup Ready GMO soybeans or other crops have been manipulated solely to be “resistant” to Roundup herbicide, while all other plant life in the field is killed by Roundup, farmers using Roundup Ready seeds must also purchase Roundup herbicide, making a captive market for both seed and chemicals.

The problem with this cozy arrangement, aside from the fact that Roundup-resistant “super-weeds” are emerging as a new biological catastrophe (see Katastrophale Folgen von GVO-Pflanzen in den USA – eine Lektion für die EU), is that Glyphosate has now been demonstrated to be linked to birth defects as one of the most highly toxic substances in agriculture. The US Government’s Environmental Protection Agency (EPA), nonetheless continues to regard Roundup as “relatively low in toxicity, and without carcinogenic or teratogenic effects.” In the United States the US Government notoriously relies on test data from Monsanto and the agribusiness industry to make safety rulings, under the 1992 doctrine of Substantial Equivalence which asserts that GMO seeds are “substantially equivalent” to ordinary seeds and thereby need no independent health or safety tests. While herbicides are treated slightly different, the fact that the agribusiness industry influences much of US Government policy has insured the most benign regulatory treatment of Roundup to date.

Alarming results

Now a new international scientific team headed by Prof. Andres Carrasco and including researchers from the UK, Brazil, USA, and Argentina have demonstrated that Glyphosate, the main active ingredient in Roundup causes malformations in frog and chicken embryos at doses far lower than those used in agricultural spraying and well below maximum residue levels in products presently approved in the European Union.[1] The Carrasco group was led to research the embryonic effects of glyphosate by reports of high rates of birth defects in rural areas of Argentina where Monsanto’s genetically modified “Roundup Ready” (RR) soybeans are grown in large monocultures sprayed from airplanes regularly. RR soy is engineered to tolerate Roundup, allowing farmers to spray the herbicide liberally to kill weeds while the crop is growing.

Carrasco presented his group’s findings at a press conference during the 6th European Conference of GMO Free Regions in the European Parliament in Brussels. He stated, “The findings in the lab are compatible with malformations observed in humans exposed to glyphosate during pregnancy.”

Widespread reports of human malformations began to be reported in Argentina beginning 2002, two years after widespread aerial spraying of Roundup and planting of RR Soybeans was begun. The test animals used by Carrasco’s group share similar developmental mechanisms with humans. The authors concluded that the results “raise concerns about the clinical findings from human offspring in populations exposed to Roundup in agricultural fields.” Carrasco added, “The toxicity classification of glyphosate is too low. In some cases this can be a powerful poison.”

The maximum residue level (MRL) allowed for glyphosate in soy in the EU was raised 200-fold from 0.1 mg/kg to 20 mg/kg in 1997 after genetically manipulated Roundup Ready soy was commercialized in Europe. Carrasco found malformations in embryos injected with 2.03 mg/kg glyphosate. Soybeans can typically contain glyphosate residues of up to 17mg/kg.

In August 2010 an organized mob violently attacked people who gathered to hear Carrasco talk about his research in the town of La Leonesa, Chaco province. Witnesses implicated local agro-industry figures in the attack. Viviana Peralta, a housewife from San Jorge, Santa Fe, Argentina was hospitalized together with her baby after Roundup spraying from planes flying near her home. Peralta and other residents launched a lawsuit that resulted in a regional court ban on the spraying of Roundup and other agrochemicals near houses.

Note

1. Paganelli, A., Gnazzo, V., Acosta, H., López, S.L., Carrasco, A.E. 2010. Glyphosate-based herbicides produce terato-genic effects on vertebrates by impairing retinoic acid signaling. Chem. Res. Toxicol., August 9. http://pubs.acs.org/doi/abs/10.1021/tx1001749

http://www.rense.com/general92/avoid.htm

Animals Avoid GM Soy And Corn

9-4-10

The GE-corn and GE-soy mentioned in this article are Monsanto's. The "food safety" bill in the Senate, S 510, is also Monsanto's. Monsanto's idea of "food safety" includes genetically engineered food, pesticides, hormones, antibiotics, or slaughterhouse waste, all toxic.

Foods You're Eating

http://www.dirtdoctor.com/organic/garden/view_question/id/366

Different species of wildlife and farm animals are trying to tell us something by clearly preferring not to eat Genetically Engineered foods when they have a choice of naturally grown corn, soybeans and other crops as the following wisdom of nature anecdotes confirms. They are smarter than people when it comes to the right choices for eating.

Neil Carman, Ph.D. Sierra Club Genetic Engineering Committee http://www.SierraClub.org/biotech

Excerpts from the new book Seeds of Deception: Exposing Industry and Government Lies About the Safety of the Genetically Engineered

Foods You're Eating

By Jeffrey M. Smith

http://www.SeedsofDeception.org

WISDOM OF THE GEESE - p. 45 excerpt

There's a farmer in Illinois who's been planting soybeans on his 50-acre field for years. Unfortunately, he also had a flock of soybean-eating geese that took up residence in a pond nearby.

Geese, being creatures of habit, returned to the same spot the next year to again feast on his soybeans. But this time, the geese ate only from a specific part of this field. There, as a result of their feasting, the beans grew only ankle high. The geese, it seemed, were boycotting the other part of the same field where the beans were able to grow waist-high.

The reason: this year, the farmer had tried the new, genetically engineered soybeans. And you can see exactly where they were planted, for there is a line right down the middle of his field with the natural beans on one side, and the genetically engineered soybeans, untouched by the geese, on the other.

Visiting that Illinois farm, veteran agricultural writer C.F. Marley said, "I've never seen anything like it. What's amazing is that the field with Roundup Ready [genetically engineered] beans had been planted to conventional beans the previous year, and the geese ate them. This year, they won't go near that field." 1

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WISDOM OF THE COWS - p. 76 excerpt

In 1998, Howard Vlieger harvested both natural corn and a genetically modified Bt variety on his farm in Maurice, Iowa. Curious about how his cows would react to the pesticide- producing Bt corn, he filled one side of his sixteen-foot trough with the Bt and dumped natural corn on the other side. Normally, his cows would eat as much corn as was available, never leaving leftovers. But when he let twenty-five of them into the pen, they all congregated on the side of the trough with the natural corn. When it was gone, they nibbled a bit on the Bt, but quickly changed their minds and walked away.

A couple of years later, Vlieger joined a room full of farmers in Ames, Iowa to hear presidential candidate Al Gore. Troubled by Gore's unquestioning acceptance of GM foods, Vlieger asked Gore to support a recently introduced bill in Congress requiring that GM foods be labeled. Gore replied that scientists said there is no difference between GM and non-GM foods. Vlieger said he respectfully disagreed and described how his cows refused to eat the GM corn. He added, "My cows are smarter than those scientists were." The room erupted in applause. Gore asked if any other farmers noticed a difference in the way their animals responded to GM food. About twelve to fifteen hands went up. 1

"If a field contained GM and non-GM maize, cattle would always eat the non-GM first." -Gale Lush, Nebraska

"A neighbor had been growing Pioneer Bt corn. When the cattle were turned out onto the stalks they just wouldn't eat them." 2 -Gary Smith, Montana

"While my cows show a preference for open-pollinated corn over the hybrid varieties, they both beat Bt-corn hands down." -Tim Eisenbeis, South Dakota

According to a 1999 Acres USA article, cattle even broke through a fence and walked through a field of Roundup Ready corn to get to a non-GM variety that they ate. The cows left the GM corn untouched.

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WISDOM OF THE COWS AND HOGS - p. 106 excerpt

Bill Lashmett watched as two or three cows were let into a feeding area at a time. The first trough they came to contained fifty pounds of shelled Bt corn. The cows sniffed it, withdrew, and walked over to the next trough, which contained fifty pounds of natural shelled corn. The cows finished it off. When they were gone and released from the pen, the next group came in and did the same thing. Lashmett said the same experiment was conducted on about six or seven farms in Northwest Iowa, in 1998 and again in 1999. Identical trials with hogs yielded the same results, also for two years in a row.

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WISDOM OF SQUIRRELS, ELK, DEER, RACCOONS, AND MICE - p. 126 excerpt

For years, a retired Iowa farmer fed squirrels on his farm through the winter months by placing corncobs on feeders. One year, just for the heck of it, he decided to see if the squirrels had a preference for Bt corn or natural corn. He put natural corn in one feeder and Bt corn in another about twenty feet away. The squirrels ate all the corn off the natural cobs but didn't touch the Bt. The farmer dutifully refilled the feeder with more natural corn and sure enough, it was soon gone. The Bt, however, remained untouched.

The retired farmer got curious. What if the Bt variety was the squirrels' only choice? To find out, he didn't refill the natural corn. At the time, Iowa was plunged into the coldest days of the winter. But day after day, the Bt cob remained intact. The squirrels went elsewhere for their food. After about ten days, the squirrels ate about an inch off the tip of an ear, but that's all. The farmer felt sorry for the squirrels and put natural corn back into the feeders, which the squirrels once again consumed. 1

"A captive elk escape and took up residence in our crops of organic corn and soy. It had total access to the neighboring fields of GM crops, but never went into them." 2 -Susan and Mark Fitzgerald, Minnesota

Writer Steve Sprinkel described a herd of about forty deer that ate from the field of organic soybeans, but not the Roundup Ready variety across the road. Likewise, raccoons devoured organic corn, but didn't touch an ear of Bt corn growing down the road. "Even the mice will move on down the line if given an alternative to these 'crops.' " 3

A farmer in Holland verified the food preference of mice when he left two piles of corn in his mice-infested barn. One pile was genetically modified; the other was natural. The GM pile was untouched while the non-GM pile was completely eaten up. Lashmett, who has a background in biochemistry and agriculture, says that animals have a natural sense to eat what is good for them, and avoid what isn't He witnessed this firsthand in another experiment conducted by a feed store in Walnut Grove, Iowa.

They put twenty-three separate vitamins and minerals, each in their own bin, out where cows could eat them. The cows would alternate their choice of bins in such a way, according to Lashmett, that they received a balanced, healthy diet. Moreover, their preference changed with the seasons and climate, demonstrating a natural inclination to follow the dictates of their bodies' needs. 1

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WISDOM OF THE MICE - p. 157 excerpt

The Washington Post reported that mice, usually happy to munch on tomatoes, turned their noses up at the genetically modified FlavSavr tomato scientists were so anxious to test on them. Scientist Roger Salquist said of his tomato, "I gotta tell you, you can be Chef Boyardee and mice are still not going to like them."1

The mice were eventually force fed the tomato through gastric tubes and stomach washes. Several developed stomach lesions; seven of forty died within two weeks. The tomato was approved without further tests [for human consumption].

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MISSING CHICKENS - p. 182 excerpt

According to BBC News, April 27, 2002:

"Safety tests on genetically modified maize currently growing in Britain were flawed, it has emerged. The crop, T-25 GM maize [corn], was tested in laboratory experiments on chickens. During the tests, twice as many chickens died when fed on T-25 GM maize, compared with those fed on conventional maize. This research was apparently overlooked when the crop was given marketing approval in 1996." 1

us like 1932/gs and hunger/economics isn't science

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http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html

With the US trapped in depression, this really is starting to feel like 1932

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.

Ambrose Evans-Pritchard
04 Jul 2010

People queue for a job fair in New York. The share of the US working-age population with jobs in June fell from 58.7pc to 58.5pc. The ratio was 63pc three years ago. Photo: EPA

"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."

"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weniger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Nevada called them "hobos". This really is starting to feel like 1932.

Washington's fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. "It's appropriate to think about what we would do under a deflationary scenario," said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to "strict scrutiny", a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

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http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-how-goldman-gambled-on-starvation-2016088.html

How Goldman gambled on starvation

Speculators set up a casino where the chips were the stomachs of millions. What does it say about our system that we can so casually inflict so much pain?

Johann Hari
2 July 2010

By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You're wrong. There's more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here's the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world.

It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it "a silent mass murder", entirely due to "man-made actions."

see: jean ziegler: un nuremberg pour les speculateurs

Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis as if they had been struck by a tsunami. "My children stopped growing," a woman my age called Abiba Getaneh, told me. "I felt like battery acid had been poured into my stomach as I starved. I took my two daughters out of school and got into debt. If it had gone on much longer, I think my baby would have died."

Most of the explanations we were given at the time have turned out to be false. It didn't happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn't because demand grew either: as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand actually fell by 3 per cent. Other factors – like the rise of biofuels, and the spike in the oil price – made a contribution, but they aren't enough on their own to explain such a violent shift.

To understand the biggest cause, you have to plough through some concepts that will make your head ache – but not half as much as they made the poor world's stomachs ache.

For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer, he'll lose some cash, but if there's a lousy summer or the global price collapses, he'll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked.

Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into "derivatives" that could be bought and sold among traders who had nothing to do with agriculture. A market in "food speculation" was born.

So Farmer Giles still agrees to sell his crop in advance to a trader for £10,000. But now, that contract can be sold on to speculators, who treat the contract itself as an object of potential wealth. Goldman Sachs can buy it and sell it on for £20,000 to Deutsche Bank, who sell it on for £30,000 to Merrill Lynch – and on and on until it seems to bear almost no relationship to Farmer Giles's crop at all.

If this seems mystifying, it is. John Lanchester, in his superb guide to the world of finance, Whoops! Why Everybody Owes Everyone and No One Can Pay, explains: "Finance, like other forms of human behaviour, underwent a change in the 20th century, a shift equivalent to the emergence of modernism in the arts – a break with common sense, a turn towards self-referentiality and abstraction and notions that couldn't be explained in workaday English." Poetry found its break with realism when T S Eliot wrote "The Wasteland". Finance found its Wasteland moment in the 1970s, when it began to be dominated by complex financial instruments that even the people selling them didn't fully understand.

So what has this got to do with the bread on Abiba's plate? Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was already deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in food contracts based on theoretical future crops – and the speculators drove the price through the roof.

Here's how it happened. In 2006, financial speculators like Goldmans pulled out of the collapsing US real estate market. They reckoned food prices would stay steady or rise while the rest of the economy tanked, so they switched their funds there. Suddenly, the world's frightened investors stampeded on to this ground.

So while the supply and demand of food stayed pretty much the same, the supply and demand for derivatives based on food massively rose – which meant the all-rolled-into-one price shot up, and the starvation began. The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home.

When I asked Merrill Lynch's spokesman to comment on the charge of causing mass hunger, he said: "Huh. I didn't know about that." He later emailed to say: "I am going to decline comment." Deutsche Bank also refused to comment. Goldman Sachs were more detailed, saying they sold their index in early 2007 and pointing out that "serious analyses ... have concluded index funds did not cause a bubble in commodity futures prices", offering as evidence a statement by the OECD.

How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period – but only a fraction as much as the ones affected by speculation. Her research shows that speculation was "the main cause" of the rise.

So it has come to this. The world's wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. Their Wasteland moment created a real wasteland. What does it say about our political and economic system that we can so casually inflict so much pain?

If we don't re-regulate, it is only a matter of time before this all happens again. How many people would it kill next time? The moves to restore the pre-1990s rules on commodities trading have been stunningly sluggish. In the US, the House has passed some regulation, but there are fears that the Senate – drenched in speculator-donations – may dilute it into meaninglessness. The EU is lagging far behind even this, while in Britain, where most of this "trade" takes place, advocacy groups are worried that David Cameron's government will block reform entirely to please his own friends and donors in the City.

Only one force can stop another speculation-starvation-bubble. The decent people in developed countries need to shout louder than the lobbyists from Goldman Sachs. The World Development Movement is launching a week of pressure this summer as crucial decisions on this are taken: text WDM to 82055 to find out what you can do.

The last time I spoke to her, Abiba said: "We can't go through that another time. Please – make sure they never, never do that to us again."

j.hari@independent.co.uk

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http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100006729/time-to-shut-down-the-us-federal-reserve/

Time to shut down the US Federal Reserve?

Ambrose Evans-Pritchard
June 29th, 2010

Like a mad aunt, the Fed is slowly losing its marbles.

Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.

Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).

Adam Smith didn't have an economics PhD

“Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.”

Don’t you just love that throw-away line “decent”? Dr Athreya hails from the University of Iowa.

“The response of the untrained to the crisis has been startling. The real issue is that there is an extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.”

You couldn’t make it up, could you?

“Economics is hard. Really hard. You just won’t believe how vastly hugely mind-boggingly hard it is. I mean you may think doing the Sunday Times crossword is difficult, but that’s just peanuts to economics. And because it is so hard, people shouldn’t blithely go shooting their mouths off about it, and pretending like it’s so easy. In fact, we would all be better off if we just ignored these clowns.”

I hold my hand up Dr Athreya and plead guilty. I am grateful to Bruce Krasting’s blog for bringing this stinging rebuke to my attention.

However, Dr Athreya’s assertions cannot be allowed to pass. The current generation of economists have led the world into a catastrophic cul de sac. And if they think we are safely on the road to recovery, they still fail to understand what they did.

Central banks were the ultimate authors of the credit crisis since it is they who set the price of credit too low, throwing the whole incentive structure of the capitalist system out of kilter, and more or less forcing banks to chase yield and engage in destructive behaviour.

They ran ever-lower real interests with each cycle, allowed asset bubbles to run unchecked (Ben Bernanke was the cheerleader of that particular folly), blamed Anglo-Saxon over-consumption on excess Asian savings (half true, but still the silliest cop-out of all time), and believed in the neanderthal doctrine of “inflation targeting”. Have they all forgotten Keynes’s cautionary words on the “tyranny of the general price level” in the early 1930s? Yes they have.

They allowed the M3 money supply to surge at double-digit rates (16pc in the US and 11pc in euroland), and are now allowing it to collapse (minus 5.5pc in the US over the last year). Have they all forgotten the Friedman-Schwartz lessons on the quantity theory of money? Yes, they have. Have they forgotten Irving Fisher’s “Debt Deflation causes of Great Depressions”? Yes, most of them have. And of course, they completely failed to see the 2007-2009 crisis coming, or to respond to it fast enough when it occurred.

The Fed has since made a hash of quantitative easing, largely due to Bernanke’s ideological infatuation with “creditism”. QE has been large enough to horrify everybody (especially the Chinese) by its sheer size – lifting the balance sheet to $2.4 trillion – but it has been carried out in such a way that it does not gain full traction. This is the worst of both worlds. So much geo-political capital wasted to such modest and distorting effect.

The error was for the Fed to buy the bonds from the banking system (and we all hate the banks, don’t we) rather than going straight to the non-bank private sector. How about purchasing a herd of Texas Longhorn cattle? That would do it. The inevitable result of this is a collapse of money velocity as banks allow their useless reserves to swell.

And now the Fed tells us all to shut up. Fie to you sir.

The 20th Century was a horrible litany of absurd experiments and atrocities committed by intellectuals, or by elite groupings that claimed a higher knowledge. Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.

The root error of the modern academy is to pretend (and perhaps believe, which is even less forgiveable), that economics is a science and answers to Newtonian laws.

In any case, Newton was wrong. He neglected the fourth dimension of time, as Einstein called it, and that is exactly what the new classical school of economics has done by failing to take into account the intertemporal effects of debt – now 360pc of GDP across the OECD bloc, if properly counted.

There has been a cosy self-delusion that rising debt is largely benign because it is merely money that society owes to itself. This is a bad error of judgement, one that the intuitive man in the street can see through immediately.

Debt draws forward prosperity, which leads to powerful overhang effects that are not properly incorporated into Fed models. That is the key reason why Ben Bernanke’s Fed was caught flat-footed when the crisis hit, and kept misjudging it until the events started to spin out of control.

Economics should never be treated as a science. Its claims are not falsifiable, which is why economists can disagree so violently among themselves: a rarer spectacle in science, where disputes are usually resolved one way or another by hard data.

It is a branch of anthropology and psychology, a moral discipline if you like. Anybody who loses sight of this is a public nuisance, starting with Dr Athreya.

As for the Fed, I venture to say that a common jury of 12 American men and women placed on the Federal Open Market Committee would have done a better job of setting monetary policy over the last 20 years than Doctors Bernanke and Greenspan.

Actually, Greenspan never got a Phd. His honourary doctorate was awarded later for political reasons. (He had been a Nixon speech-writer). But never mind.

Ambrose Evans-Pritchard has covered world politics and economics for 25 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.

gs vs fcic/bis risky call/debt as drug/euro mutiny/decrescita/terror profit soc gen

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http://www.bloomberg.com/news/2010-07-01/goldman-sachs-pressed-by-u-s-financial-crisis-panel-for-derivatives-data.html

Goldman Sachs Pressed for Derivatives Data

Matthew Leising and Shannon D. Harrington
Jul 1, 2010

Goldman Sachs Group Inc. refused a request from the Financial Crisis Inquiry Commission to reveal how much it makes trading derivatives, saying the bank doesn’t separate the figure from other businesses.

“Some other firms have provided us with that data when we’ve asked for it and Goldman Sachs hasn’t,” Commissioner Brooksley Born said today in Washington on the second day of a hearing investigating the role of derivatives in the 2008 credit crisis, which sparked the worst recession since the 1930s. “It makes one wonder why Goldman has the incentive or impetus to not release this information.”

Banks including JPMorgan Chase & Co., the biggest derivatives dealer, have provided estimates to investors. The top five U.S. commercial banks, including Goldman Sachs, generated an estimated $28 billion in revenue from privately negotiated derivatives in 2009, according to company reports collected by the Federal Reserve and people familiar with banks’ income sources.

Goldman Sachs, the most profitable Wall Street firm in history, is being questioned about credit-default swap trades with American International Group Inc., the insurer bailed out by the U.S. government after AIG was unable to meet collateral demands from trading partners on the contracts. The swaps, used by Goldman Sachs and other banks to hedge against declines in the value of mortgage-linked debt, caused losses at AIG as housing prices collapsed.

‘It’s Integrated’

Goldman Sachs Chief Financial Officer David Viniar testified today that the firm has no way of separating out its derivatives data from trading in cash securities.

“We don’t have a separate derivatives business,” Viniar told the panel. “It’s integrated into the rest of our business.”

Commissioner Byron Georgiou said he doubted Goldman Sachs was unable to provide the information.

“When you tell us that you don’t know how much you make in your derivatives business, nobody here really believes it,” Georgiou told Viniar. “Nobody here believes that you don’t know how much money you’re making on the various aspects of your business, it doesn’t make any sense.”

$49.1 Trillion

Goldman Sachs held a gross amount of $49.1 trillion of derivatives contracts as of March 31, according to an Office of the Comptroller of the Currency report last month. The bank reported total trading revenue of $7.65 billion during the first quarter. That follows total trading revenue of $23.2 billion in 2009, according to a filing with the Federal Reserve.

“It’s kind of dangerous, don’t you think, to claim to the FCIC that you don’t know the profitability of a major line of business,” said Craig Pirrong, a finance professor at the University of Houston. “How can you rationally allocate capital, for instance, if you don’t know the return to that capital?”

Under a March 2008 amendment to derivatives accounting standards, companies are exempt from breaking out gains or losses on derivatives used as part of a trading book that also includes cash securities, if other information on the trading activities is provided, according to the Financial Accounting Standards Board’s Statement No. 161.

Goldman Sachs is “definitely capable of providing the data that was asked for, but I can understand their fear of doing so,” said Brian Yelvington, head of fixed-income strategy at broker-dealer Knight Libertas LLC in Greenwich, Connecticut, and a former credit swaps trader.

Derivatives Revenue

“There is a potential for such a number to vastly overstate the amount of profit or loss captured by a particular business because much of that business may be symbiotic with another,” Yelvington said. “They may have made money on the derivatives leg of a trade, for example, and lost it on the cash leg.”

JPMorgan said in February 2009 that about 8 percent of its total revenue from 2006 to 2008 came from derivatives in its investment-banking unit, according to a presentation made to investors.

That breakdown and revenue figures from regulatory filings imply that half of JPMorgan’s $31.2 billion in trading revenue those years came from derivatives, according to Alexander Yavorsky, a senior analyst at Moody’s Investors Service in New York.

‘Highly Imprecise’

“Reporting a revenue number, just the profit on derivatives without looking at cash positions associated with hedging those, is going to be a highly imprecise exercise,” Yavorsky said in an interview today.

Goldman Sachs was subpoenaed by the commission last month after the New York-based firm sent more than a billion pages of documents to the panel, a shipment so sizable that panel members called it an attempt to hinder their probe.

“We did not ask them to pull up a dump truck to our offices and dump a bunch of rubbish,” Chairman Phil Angelides, who previously served as California’s treasurer, said June 7. “This has been a very deliberate effort over time to run out the clock.”

The commission, which will report its findings to Congress and President Barack Obama by December, said June 29 that the bank had been more responsive to information requests since being subpoenaed. Separately, Goldman Sachs faces a U.S. Securities and Exchange Commission fraud suit over sales of a mortgage-linked security. The bank has said the SEC suit is unfounded.

Born’s Warning

Born had warned in 1998, as chairman of the Commodity Futures Trading Commission, that the unregulated over-the- counter derivatives market posed a danger to the global financial system. She moved to address changes in how swaps based on interest rates, commodities or currencies were traded and was stopped by then-Federal Reserve Chairman Alan Greenspan, SEC Chairman Arthur Levitt and Treasury Secretary Robert Rubin, who all argued the market could regulate itself.

Born said last year that the banks that caused the crisis were trying to stop the congressional overhaul of the market.

“Special interests in the financial-services industry are beginning to advocate a return to business as usual,” Born said in May 2009 as she accepted a Profile in Courage award from the John F. Kennedy Library Foundation.

To contact the reporters on this story: Matthew Leising in New York at mleising@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net

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http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7859800/BIS-plays-with-fire-demands-double-barrelled-monetary-and-fiscal-tightening.html

BIS plays with fire, demands double-barrelled monetary and fiscal tightening

The Bank for International Settlements has warned authorities across the developed world that they cannot rely on ultra-low interest rates to cushion the blow of austerity measures.

Ambrose Evans-Pritchard
28 Jun 2010

Both fiscal and monetary policy may have to be tightened at the same time and ­before recovery is entrenched, a chilling possibility for asset markets. "Macroeconomic support has its limits," said the bank's annual report.

The Swiss-based "bank for central bankers" said ultra-low rates and massive fiscal stimulus saved the world from an economic meltdown during the credit crisis, but the balance of advantage has since shifted.

"Such powerful measures have strong side-effects, and their dangers are becoming apparent. The time has come to ask how they can be phased out," it said.

"There are limits to how long monetary policy can remain expansionary. Keeping interest rates near zero for too long, with abundant liquidity, leads to distortions and creates risks for financial stability. We cannot wait for the resumption of strong growth to begin the process of policy correction."

The clarion call for higher rates and an end to quantitative easing is controversial and pits the BIS against the International Monetary Fund in an epochal policy battle. If wrong, the BIS strategy risks pushing the global economy into depression.

Dominique Strauss-Kahn, the IMF chief, warned against zealous self-flagellation at the G20 summit. "It could be a catastrophe if all the countries were tightening, it could totally destroy the recovery."

Gabriel Stein, of Lombard Street Research, said the BIS is playing with fire. "Fiscal and monetary tightening were tried in tandem in the early 1930s and it didn't work then. The BIS ought to know better," he said.

The bank said the US and Europe made the fatal error of holding rates too low after the dotcom bust, fearing a slide towards deflation. The effect was to fuel asset bubbles and depress credit yields, pressuring lenders to chase risk. "Our recent experience with exactly these consequences a mere five years ago should make us extremely wary this time around," it said.

The BIS warned that central banks are luring banks into a fresh trap by shoring up lenders with cheap access to short-term funding, which is then used to buy long-dated bonds at higher yield – the so-called sovereign "carry trade". Some have already been caught out badly in Greek debt.

"Financial institutions may underestimate the risk associated with this maturity exposure. They might face difficulty rolling over their short-term debt. An unexpected tightening of monetary policy might cause serious repercussions," it said.

The parallel with post dotcom errors is likely to rile critics. Housing markets and banks were robust at the time, whereas the damage now is deeply structural in the US, Britain and Europe. Yet the BIS has clearly concluded that it is better for indebted economies to take their punishment early rather than dragging out the ordeal as in Japan.

On the spending side, the bank called for "immediate front-loaded fiscal consolidation" in key industrial states. "Public debt-to-GDP ratios are on unsustainable trajectories," rising from 76pc of GDP in 2007 to 100pc in 2011. The picture is worse than it looks since the crisis has "permanently" reduced output, and aging costs are soaring.

Yet fiscal austerity may be less of a drag on recovery than presumed. Denmark slashed its primary deficit by 13.4pc of GDP from 1983-1986, yet eked out growth of 3.9pc a year. Sweden grew by 3.7pc during its hair-shirt episode in the 1990s, Canada by 2.8pc, and Belgium by 2.3pc.

These cases do not tell us what would happen if half the world tightens at the same time, feeding on each other. Even so, the BIS data challenges Keynesian claims about fiscal stimulus. State spending merely "crowds out" private activity.

Besides, governments have no choice. They must retrench to appease the bond vigilantes in the new era of sovereign frailty. "A sudden loss in market confidence would be far worse," said the BIS.

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http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7857595/RBS-tells-clients-to-prepare-for-monster-money-printing-by-the-Federal-Reserve.html

RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve

As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.

Ambrose Evans-Pritchard
27 Jun 2010

Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy.

The speech is best known for its irreverent one-liner: "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost."

Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).

Investors basking in Wall Street's V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing.

The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era.

The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7pc in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40pc in a month. This is a volatile index that can be distorted by the supply of new ships, but those who watch it as an early warning signal for China and commodities are nervous.

Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on "monster" quantitative easing (QE)".

"We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable," he said in a note to investors.

Roberts said the Fed will shift tack, resorting to the 1940s strategy of capping bond yields around 2pc by force majeure said this is the option "which I personally prefer".

A recent paper by the San Francisco Fed argues that interest rates should now be minus 5pc under the bank's "rule of thumb" measure of capacity use and unemployment. The rate is currently minus 2pc when QE is factored in. You could conclude, very crudely, that the Fed must therefore buy another $2 trillion of bonds, and even more if Europe's EMU debacle goes from bad to worse. I suspect that this hints at the Bernanke view, but it is anathema to hardliners at the Kansas, Richmond, Philadephia, and Dallas Feds.

Societe Generale's uber-bear Albert Edwards said the Fed and other central banks will be forced to print more money whatever they now say, given the "stinking fiscal mess" across the developed world. "The response to the coming deflationary maelstrom will be additional money printing that will make the recent QE seem insignificant," he said.

Despite the apparent rift with Europe, the US is arguably tightening fiscal policy just as hard. Congress has cut off benefits for those unemployed beyond six months, leaving 1.3m without support. California has to slash $19bn in spending this year, as much as Greece, Portugal, Ireland, Hungary, and Romania combined. The states together must cut $112bn to comply with state laws.

The Congressional Budget Office said federal stimulus from the Obama package peaked in the first quarter. The effect will turn sharply negative by next year as tax rises automatically kick in, a net swing of 4pc of GDP. This is happening as the US housing market tips into a double-dip. New homes sales crashed 33pc to a record low of 300,000 in May after subsidies expired.

It is sobering that zero rates, QE a l'outrance, and an $800bn fiscal blitz should should have delivered so little. Just as it is sobering that Club Med bond purchases by the European Central Bank and the creation of the EU's €750bn rescue "shield" have failed to stabilize Europe's debt markets. Greek default contracts reached an all-time high of 1,125 on Friday even though the €110bn EU-IMF rescue is up and running. Are investors questioning EU solvency itself, or making a judgment on German willingness to back pledges with real money?

Clearly we are nearing the end of the "Phoney War", that phase of the global crisis when it seemed as if governments could conjure away the Great Debt. The trauma has merely been displaced from banks, auto makers, and homeowners onto the taxpayer, lifting public debt in the OECD bloc from 70pc of GDP to 100pc by next year. As the Bank for International Settlements warns, sovereign debt crises are nearing "boiling point" in half the world economy.

Fiscal largesse had its place last year. It arrested the downward spiral at a crucial moment, but that moment has passed. There is a time to love and a time to hate, a time for war and a time for peace. The Krugman doctrine of perma-deficits is ruinous - and has in fact ruined Japan. The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes.

Some say that the Fed's QE policies have failed. I profoundly disagree. The US property market - and therefore the banks - would have imploded if the Fed had not pulled down mortgage rates so aggressively, but you can never prove a counter-factual.

The case for fresh QE is not to inflate away the debt or default on Chinese creditors by stealth devaluation. It is to prevent deflation.

Bernanke warned in that speech eight years ago that "sustained deflation can be highly destructive to a modern economy" because it leads to slow death from a rising real burden of debt.

At the time, the broad money supply war growing at 6pc and the Dallas Fed's `trimmed mean' index of core inflation was 2.2pc.

We are much nearer the tipping today. The M3 money supply has contracted by 5.5pc over the last year, and the pace is accelerating: the 'trimmed mean' index is now 0.6pc on a six-month basis, the lowest ever. America is one twist shy of a debt-deflation trap.

There is no doubt that the Fed has the tools to stop this. "Sufficient injections of money will ultimately always reverse a deflation," said Bernanke. The question is whether he can muster support for such action in the face of massive popular disgust, a Republican Fronde in Congress, and resistance from the liquidationsists at the Kansas, Philadelphia, and Richmond Feds. If he cannot, we are in grave trouble.

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http://www.economist.com/node/16426084?story_id=16426084&source=hptextfeature

The age of easy credit and its aftermath Is there life after debt?

Rich countries borrowed from the future.

Paying the bill will be difficult, and so will living in a thriftier world

The Economist
Jun 24th 2010

DEBT is as powerful a drug as alcohol and nicotine. In boom times Western consumers used it to enhance their lifestyles, companies borrowed to expand their businesses and investors employed debt to enhance their returns. For as long as the boom lasted, Mr Micawber’s famous injunction appeared to be wrong: when annual expenditure exceeded income, the result was happiness, not misery.

For a long time debt in the rich world has grown faster than incomes. As our special report this week spells out, it is not just government deficits that have swelled. In America private-sector debt alone rose from around 50% of GDP in 1950 to nearly 300% at its recent peak. The origins of the boom go even further back, reflecting huge changes in social attitudes. In the 19th century defaulting borrowers were sent to prison. The generation that lived through the Great Depression learned to scrimp and save. But the wider take-up of credit cards in the 1960s created a “buy now, pay later” society. Default became just a lifestyle choice. The reckless lender, rather than the imprudent debtor, was likely to get the blame.

As consumers leveraged up, so did companies. The average bond rating fell from A in 1981 to BBB- today, just one notch above junk status. Firms that held cash on their balance-sheets were criticised for their timidity, while bankruptcy laws, such as America’s Chapter 11, prevented creditors from foreclosing on companies. That forgiving regime encouraged entrepreneurs (in Silicon Valley a bankruptcy is like a duelling scar in a Prussian officers’ mess) but also allowed too many zombie companies to survive (look at the airlines). And no industry was more addicted to leverage than finance. Banks ran balance-sheets with ever lower levels of equity capital; private equity and hedge funds, which use debt aggressively, churned out billionaires. The road to riches was simple: buy an asset with borrowed money, then sit back and watch its price rise.

All this was encouraged by the authorities. Any time a debt crisis threatened the economy, central banks slashed interest rates. The prospect of such rescues reduced the risk of taking on more debt. Bubbles were created, first in equities, then in housing. It was a monetary ratchet, in which each cycle ended with much higher debt and much lower interest rates. The end-game was reached in 2007-08 when investors realised a lot of this debt would not be repaid. As the credit crunch tightened, central banks had to cut short-term rates to 1% or below.

And now the reckoning

Rich-world countries now face two sets of problems. The most pressing is how to pay off their debts. Many people who have cut back their credit-card spending and firms which have seen their credit lines slashed would be horrified to see how little the rich world’s overall burden has fallen. Much of the debt has merely moved from the private to the public sector as governments have correctly stepped in to support banks and save the economy from falling into depression. And in the future, even more money will have to be raised, because of governments’ lavish promises of pensions and health care for the retiring baby-boom generation.

All this debt will have to be regularly refinanced and rolled over. Crises of confidence are likely, given that the rich world’s trend rate of growth (and thus the ability of debtors to service their loans) looks set to slow. Worse, much private debt is secured against assets; while the value of the debt is fixed, the value of the assets can fall. This can cause a vicious circle as debtors are forced to sell assets, driving prices down.

Piling up more debt does not seem an option. There is little appetite on behalf of borrowers or creditors. All governments face the tricky balance of appeasing the markets without damaging growth: Britain’s new government had a go this week (see article). But living with less debt will present a second set of longer-term challenges.

The road to purgatory

A rich world with less debt would look very different. Banks are already facing demands for higher capital ratios (and thus safer balance-sheets). Western consumers, facing higher taxes and lower benefits, will no longer have the freedom to spend; indeed, they will want to save more as they face long retirements. Sarah Jessica Parker and her Manolo Blahniks will be out; Grandma Walton and her sensible apron will be in. Houses will once again be somewhere to live, not vehicles for speculation. Some business models, notably private equity, will find it tougher to thrive. Life will be harder for entrepreneurs: more than half of all new firms rely on debt finance.

For policymakers, the priorities are clear. First, they need to focus on generating growth. America, with its relatively young, rising population, will find that comparatively easy. Continental Europe, by contrast, runs the risk of ending up like Japan, which has spent two decades struggling to grow in the face of its debt burden and ageing population. The best and the brightest young Europeans may emigrate to countries without such burdens; and if the economy stagnates, those that remain may eventually decide either to default on their debts, or to cut benefits to the elderly. Faced with those dangers, Europe needs to embrace the structural reforms necessary to make its economies as fast-growing and flexible as possible.

Second, policymakers need to begin the long task of rebalancing the world economy. It makes sense for Western countries, like workers in their 50s, to save for retirement rather than run up their credit-card bills. But if one lot of people saves, another must borrow. At the moment the developing world is unwilling to run current-account deficits; even getting China to save less is a huge task (see article). All the same, a shift is in everybody’s long-term interest—and the younger parts of the world should be the borrowers.

Weaning rich countries off their debt addiction will cause withdrawal symptoms. Austerity does not appeal to voters, who may work off their frustrations on politicians and (worse) foreigners. Mr Micawber’s phrase may be turned on its head again. When annual income is forced to exceed annual expenditure, the result may well be misery.

An interactive chart allows you to compare how the debt burden varies across 14 countries and to examine different types of borrowing

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http://www.telegraph.co.uk/news/worldnews/europe/7837874/Germany-and-France-examine-two-tier-euro.html

Germany and France examine 'two-tier' euro

Germany and France are examining ways of creating a "two-tier" euro system to separate stronger northern European countries from weaker southern states.

Alex Spillius in Washington and Bruno Waterfield in Brussels
19 Jun 2010

A European official has told The Daily Telegraph the dramatic option was being examined at cabinet level.

Senior politicians believe their economies need to be better protected as they could not cope with another crisis on a par the one in Greece.

The creation of a "super-euro" zone would initially include France, Germany, Holland, Austria and Finland.

The likes of Greece, Spain, Italy, Portugal and even Ireland would be left in a larger rump mostly Mediterranean grouping.

The official said French and German officials had first spent months examining how to exclude poor-performing states from the euro but decided it was not feasible.

A two-tier monetary system in the 16-member euro zone is being examined as a "plan B".

"The philosophy is the stronger countries might need to move away from countries they can't afford to bail-out," said the official. "As a way of containing the damage, they may have to do something dramatic, though obviously in the short term implementation is difficult.

"It's an act of desperation. They are not talking about ideal solutions but the lesser of evils. Helping Greece could be done relatively cheaply but Spain they can't afford to let fail or bail-out.

"And putting more pressure on the people of France and Germany to save other countries is politically unfeasible."

One option, to protect the wealthier northern European countries and to help indebted southern Europeans, would be for Germany to lead a group of countries out of the existing euro into a new single currency alongside the old.

The old euro would decline sharply against the new German and French dominated currency but both north and southern Europeans would be protected.

Northern economies would be protected from debt contagion and southern countries would be spared the horrors of being thrown out and forced to go it alone.

Angela Merkel, the German Chancellor, has already paid a political price for forcing the rescue plan on a reluctant public, losing her majority in the upper house of parliament in a recent election.

The official pointed out that France held lent £500 billion to Spain and the Germans had lent £335 billion.

Nicolas Sarkozy, the French president, is understood to have been initially cool on the idea but has grown so frustrated with Greece and now Spain that he has allowed officials to explore proposals.

"He would prefer to keep the euro in place but if Spain, Italy and Greece are dragging him down he accepts he may have to cut them loose," said the official. "They are trying to contain the contagious effect but they don't have a solution yet."

The crunch time will come in September, when Spain has to refinance £67 billion of its foreign debt.

"If the markets don't buy that will trigger a response by Germany and France," said the official.

Expelling a country from the euro could push the whole region into a slump because European banks are so exposed to debt in southern Europe. The consequences for the exiting country would be even more catastrophic.

"The euro zone debt crisis has a long way to run," said one senior EU negotiator. "No one knows where it is going to end up. Only one thing is sure, the euro zone will change."

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7834051/Italian-economists-slam-austerity-measures.html

Italian economists slam austerity measures

A group of 100 Italian economists has written an open letter warning that the EU austerity policies being imposed on Southern Europe may tip the region into a downward spiral, risking the disintegration of the monetary union.

Ambrose Evans-Pritchard
17 Jun 2010

"The `politics of sacrifice' in Italy and in Europe run the risk of accentuating the crisis in the end, causing a faster rise in unemployment and company failures, and could at a certain point compel some countries to leave monetary union. We must have an immediate debate on the extremely grave errors in economic policies now being committed," the economists said.

"The fundamental point is that the current instability of monetary union is not just the result of accounting fraud and over-spending. In reality, it stems from a profound interweaving of the global economic crisis and imbalances within the eurozone."

The letter, which has echoes of a famous letter to The Times by 360 economists denouncing the Thatcher cuts in the early 1980s, was drafted by a network of Left-leaning Keynesian economists and published by Il Sole.

The letter accused the EU authorities and leading governments of being out of step with modern economic thinking, marking the first clear revolt by parts of the eurozone's intellectual elite against EMU orthodoxies and especially against the "deflationary economic policies" being imposed by Germany.

The group said states might choose to leave EMU in order to end job destruction.

"Some countries will be pushed out of the eurozone, others will break away to free themselves from a deflationary spiral."

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http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100006271/the-euro-mutiny-begins/

The euro mutiny begins

Ambrose Evans-Pritchard
June 16th, 2010

The rebellion against the 1930s fiscal and monetary policies of the Euro-complex is gathering pace.

Il Sole has published a letter by 100 Italian economists warning that the austerity strategy imposed by Brussels/Frankfurt risks tipping Europe into a self-feeding downward spiral. Far from holding the eurozone together, it will cause weaker countries to be catapulted out of EMU. Others will leave in order to restore sovereign control over their central banks and unemployment policies.

At worst it will blow the EU apart, leading to the very acrimony that the European Project was supposed to prevent.

For readers of Italian, it’s here.

While I don’t share the big-state Left-Keynesian perspective of these professors — nor their implicit hostility to the free market — I do agree with much of their overall analysis.

My rough translation:

“The grave economic global crisis, and its links to the eurozone crisis, will not be resolved by cutting salaries, pensions, the welfare state, education, research …….. More likely, the `politics of sacrifice’ in Italy and in Europe runs the risk of accentuating the crisis in the end, causing a faster rise in unemployment, of insolvencies and company failures, and could at a certain point compel some countries to leave monetary union.

“The fundamental point to understand is that the current instability of monetary union is not just the result of accounting fraud and over-spending. In reality, it stems from a profound interweaving of the global economic crisis and imbalances within the eurozone …..

It blames the crisis on the “deflationary economic policies” of the richer states. “Especially Germany, geared for a long time to holding down salaries in relation to productivity, and to the penetration of foreign markets, gaining European market share for German companies…

They say the policy has led to growing surpluses in Germany, offset by growing debts in Southern Europe. The adjustment mechanism has not only failed. Matters have got worse, and worse.

“This is the deeper reason why market traders are betting on a collapse of the eurozone. They can see that as the crisis drags on this will cause tax revenues to fall, making it ever harder to repay debts, whether public or private. Some countries will progressively be pushed out of the eurozone, others will decide to break away to free themselves from a deflationary spiral… It is the risk of widespread defaults and the reconversion of debts into national currencies that is really motivating bets by speculators.

The economists denounced the “obstinacy” with which the EU authorities and governments are pursuing “depressionary policies”, and called on the European Central Bank to abandon its policy of “sterilizing” purchases of Greek, Portuguese, and Spanish bonds, and move to fully-fledged quantitative easing to boost the money supply.

“We must have an immediate debate on the extremely grave errors in economic policies now being committed..

Si, Signori .. Bravissimi.

Just to be clear, I do not share their Krugmanite view that huge fiscal deficits are benign. In my view, it is imperative that the whole western world reduces debt in a orderly fashion over 10 to 15 years. Pacing is crucial. Too fast can be self-defeating. Too slow is not an option.

My objection with the EU’s mix of policies is that extreme fiscal austerity is being imposed on a string of countries without offsetting monetary stimulus. (Yes, I know, some will say that I am mixing apples and oranges).

Ireland, Spain, and Portugal have already tipped into outright deflation. Ireland’s nominal GDP has contracted 18.6pc since the peak. They are falling deeper into an Irving Fisher debt-deflation trap.

This is reactionary folly. The College of European Commission should be taken out and horse-whipped outside the Breydel Building for demanding yet further cuts from Spain — which is already cutting wages 5pc this year, in an economy where total public /private debt is 280pc of GDP or more. Can nobody think of a more coherent way out of this?

As for Germany, frankly it is hard to know what to say. It is astonishing that Chancellor Merkel should unveil an €80bn package of fiscal retrenchment without consulting with the rest of Europe. This has raised the bar for everybody else, forcing them into yet further contractionary policies to keep up. Mrs Merkel does not begin to understand the nature of commitment made by Germany when it launched monetary union.

EMU has become an infernal machine. This will not be the last letter by angry economists.

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http://ricerca.repubblica.it/repubblica/archivio/repubblica/2010/06/05/io-economista-finalmente-felice-vi-racconto-la.html

Io, economista finalmente felice vi racconto la mia vita a impatto zero

Repubblica
05 giugno 2010
pagina 39 sezione: CULTURA

Da molto tempo ormai non uso più l' automobile, mi muovo soltanto in bicicletta. Quando vengo in Italia, cosa che mi capita spesso, non prendo mai l' aereo, solo il treno. Anche se sono stato a lungo un amante della carne, ora ne mangio pochissima, mi diverto a scoprire altri sapori, perché gli allevamenti intensivi di bestiame sono tra le prime cause dell' inquinamento atmosferico. Un chilo di carne equivale a sei litri di petrolio. Preferisco comprare quel che mi serve nelle piccole botteghe e cerco di usare ogni cosa sino a consumarla del tutto. Piuttosto che buttare, riparo, anche se oggigiorno costa meno comprare un oggetto nuovo fabbricato in Cina. Ma preferisco appunto allungare la vita delle cose, o riciclare, combattendo così la filosofia dell' usa-e-getta, l' obsolescenza programmata dei beni. Non possiedo un cellulare, e sto bene così. Pratico quello che il mio maestro Ivan Illich chiamava "tecnodigiuno". Non guardo mai la televisione e ho soltanto un computer che mi permette di consultare ogni tanto le email. Non mi collego ogni giorno alla posta elettronica, faccio delle lunghe pause anche in questo. Spesso scrivo lettere a mano perché è un modo di dimostrare a me stesso che non ho bisogno di una protesi elettronica per comunicare con gli altri. L' importante è resistere alla "tecno-dipendenza". Si può usare la tecnologia ma bisogna evitare di esserne schiavi. Benché faccia tutte queste rinunce rispetto allo stile di vita moderno, non sono da compatire. Invertire la corsa all' eccesso è la cosa più allegra che ci sia. La mia unica regola è la gioia di vivere. E' possibile immaginare una società ecologica felice, dove ognuno di noi riesce a porsi dei limiti, senza soffrirne perché non si sono create delle dipendenze. E' ormai riconosciuto che il perseguimento indefinito della crescita è incompatibile con un pianeta finito. Se non vi sarà un' inversione di rotta, ci attende una catastrofe ecologica e umana. Siamo ancora in tempo per immaginare, serenamente, un sistema basato su un' altra logica: quella di una "società di decrescita". Io parlo di decrescita felice, perché sono convinto che si tratta di piccoli aggiustamenti che ognuno di noi può fare senza soffrirne. Da giovane ero un economista esperto di sviluppo. Negli anni Sessanta sono stato in Congo e poi nel Laos per attuare programmi di sviluppo economico. E' così che è incominciata la mia riflessione critica su questo modello di crescita continua. Pensavo essere al servizio di una scienza, in realtà si trattava di una religione. Gli economisti come me allora sono dei missionari che vogliono convertire e distruggere popoli che vivevano diversamente. Quando ho iniziato a non seguire più questa dottrina assoluta, in vigore ormai da decenni, ero molto isolato. In Occidente nessuno ha avuto il coraggio di parlare di decrescita fino al 1989, dopo il crollo del Muro. Quando siamo entrati in un mondo globale, senza più differenze tra primo, secondo o terzo mondo, lentamente c' è stata una presa di coscienza. Oggi non si tratta di trovare un nuovo modello economico ma di uscire dal governo dell' economia per riscoprire i valori sociali e dare la priorità alla politica. Ognuno di noi può fare qualcosa intorno a quelle che io chiamo le otto ' R' . Ovvero rivalutare, riconcettualizzare, ristrutturare, ridistribuire, rilocalizzare, ridurre, riutilizzare, riciclare. Rivalutare significa per esempio creare un diverso immaginario collettivo, fatto dell' amore per la verità, di un senso della giustizia e della responsabilità, del dovere di solidarietà. Rilocalizzare vuol dire produrre a livello locale i prodotti necessari a soddisfare i bisogni della popolazione. Riutilizzare e riciclare è anche l' unico modo di evitare di essere sommersi dai rifiuti infiniti che stanno distruggendo la Terra. Le otto ' R' sono cambiamenti interdipendenti, che insieme possono far nascere una nuova società ecologica. Una società nella quale ci sentiremo di nuovo cittadini, e non più solo semplici consumatori. (testo raccolto da Anais Ginori) - SERGE LATOUCHE

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5568518.ece

SocGen rogue trader Jerome Kerviel 'hit the jackpot' on 7/7

Adam Sage in Paris
January 23, 2009

It was a day of carnage that left 56 people dead and a dark shadow for ever cast over the history of London. But for Jérôme Kerviel, the French rogue trader, 7/7 was the jackpot.

Mr Kerviel, whose wild bets on the stock market ended with record losses, celebrated as Britain’s worst terror attack helped him to register a €500,000 profit and to continue a winning streak that brought him “orgasmic pleasure”.

The trader made the confession as he told the newspaper Le Parisien how he had lost touch with reality in the pursuit of money-making at Société Générale, the bank that employed him. It is alleged that his rogue dealings resulted in record losses of almost €5 billion and plunged the 144-year-old French financial institution into crisis.

Mr Kerviel, who was questioned by magistrates yesterday, is under investigation on suspicion of breach of trust, fabricating documents and accessing computers illegally. He faces a maximum sentence of five years in prison if found guilty.

The trader, 32, claimed that his colleagues and superiors had been aware of his actions, which brought him the nickname of le cash machine. He painted a damning picture of the bank’s trading room as earnings soared in the years before the financial crisis.

“The best trading day in the history of Société Générale was September 11, 2001,” he said. “At least, that’s what one of my managers told me. It seems that profits were colossal that day.

“I had a similar experience during the London attacks in July 2005.”

A few days earlier he had bet on a fall in the share price of Allianz, the German insurance giant, he told Le Parisien. Everyone was losing money when the 7/7 bombings sent the insurance sector into a downward spiral “except for me”, he said. “Thanks to the positions I had, I earned €500,000 in a few minutes. It was the jackpot. I was jubilant.”

After the celebrations Mr Kerviel said he paused for thought. “I understood that I was having fun when people had just been hit by the bombs. I ran to the toilet and I was sick. But the moment of weakness did not last long. I went back into the trading room and I returned to work.”

Mr Kerviel also spoke of his financial triumphs in the months leading up to the discovery of his unauthorised trades in January last year. “From August to December 2007, I win every day,” he said. “That creates a sort of addiction. A good day for a normal trader is a profit of €30,000 to €40,000. For me, a €1 million day is rubbish. I take crazy risks. And I make astronomic profits which sometimes give me an orgasmic pleasure.”

He denounced his former colleagues as hypocrites for claiming that they had no idea of his deals after he ran up a profit of €1.4 billion in 2007. “I covered the losses of several of my colleagues,” he said.

Mr Kerviel sought to distance himself from his comments after their publication in Le Parisien, saying that they stemmed from a private conversation and were taken out of context. The newspaper said that he met its journalist six times for on-the-record interviews at the request of his lawyers.

Losing bet

2000 Jérôme Kerviel joins Société Générale

January 18, 2008 Bank investigates after transactions raise red flags

January 19 Kerviel begins to admit to unauthorised trading activity

January 20 Total exposure to trades is pinned at €5 billion

January 24 SocGen asks for its shares to be suspended

January 25 Kerviel named as “rogue trader”

Source: Times archives